Business confidence in Vietnam increased for the second consecutive month

The Vietnam Manufacturing Purchasing Managers' Index (PMI) edged up to 49.2 in February 2025, from 48.9 in January. However, this was also the third consecutive month. The Vietnam PMI remained below the 50-point threshold, reflecting a slight contraction in business conditions during the month.

According to S&P Global, New orders continued to decline in February. Although the rate of decline was only slight, but accelerated to the fastest rate since September 2024. This was attributed to weak demand in both domestic and international markets. Weak export demand was highlighted by a further decline in new export orders, which have now fallen for the fourth month in a row.

Manufacturing output also decreased for the second consecutive month in February. The shortage of new orders is also causing some companies to postpone replacing departing employees, This resulted in a fifth consecutive decline in employment. However, the pace of job losses has slowed compared to January.

Business confidence in Vietnam rose for the second consecutive month

In contrast to the overall trend in the manufacturing industry in February, Purchasing activity edged up. In some cases, increased purchasing of inputs reflects confidence in the outlook for manufacturing output.

In fact, business confidence has risen for the second consecutive month to its highest level since June 2024. Companies hope that stable economic conditions will help improve new order volumes and thereby boost output growth.

S&P Global reports that supplier delivery times remained lengthened, since then, the decline in sales performance that started in September 2024 has continued. Moreover, the level of delivery delays during this period is the most significant over the last five months. Survey team members reported issues related to both the availability of goods and transportation speed.

Delivery delays, combined with the use of input goods to support production, caused purchased goods inventory to continue to decline despite increased purchasing activity. Finished goods inventory also decreased amid declining production and efforts to reduce inventory as the number of new orders fell.

Along with reporting a shortage of transportation means, companies also indicated increased shipping costs. Raw material prices have increased significantly, and this has caused input costs to rise again in February. However, the rate of cost increases was the weakest in the current 19-month streak and below the historical average of the index.

Conversely to rising input costs, Manufacturers reduced selling prices for the second consecutive month amid weak demand. The decrease was slight but faster than in January.